As a bankruptcy attorney, I have the hardest time with student loans. The darn things are not dischargeable in bankruptcy and there’s not much else you can do with them either.
You can get a temporary moratorium on paying them if you go back to school, but the interest rate still accumulates and the new schooling just adds to the debt.
It’s easy to talk about responsibility. But when schools keep increasing their tuition year after year at much higher than the normal rate of inflation, it doesn’t take long for the numbers to add up. When I went to law school, tuition increased at about $1,000 per year from year to year. Now it’s much higher than that.
At some point, you need to have a heart-to-heart with yourself about the return on investment. My son’s four year college expense was a large waste of money. However, more recently, he decided to change fields, and he took a special two year medical program for a specialized medical skill. He got a job right out of the new school and has made back more than ten times his tuition in a year. Education can help you make more money, but not just any education - it may be for something you may not want to do.
President Obama today unveiled a new plan to deal with student loan debt. Lower payments to 10% of disposable income. At first, it sounds great. But since interest would still accumulate, you’ll end up paying for that loan for - well - forever.
I’ve personally had nothing but trouble with Sallie Mae. I helped pay my son’s loan. We paid extra - we paid early. They never got the numbers right and always the mistakes were in their favor. They tried everything in the world to keep us from paying the loan off early. We paid more, instead of lowering principle, they just extended out the next due date for payment, so they could keep the balance up and keep charging interest. We got so disgusted that we paid it off in full in a lump sum. Sallie Mae still does most of the businesses on college campuses. I understand they pay the college in order to get the college to push their loans.
As long as loans were available, there was no incentive to stop colleges from repeatedly increasing their fees. I think it’s the biggest scam that ever existed, preying on the most vulnerable members of society - our kids.
I remember how I saved up for higher education, and wiped out my savings to pay for my first year in law school - it saved me thousands of dollars in interest down the road. As a result, I no longer have student loan debt. Many of my colleagues can’t say the same. They’ll take their debts to their grave.
The thing I like least about Obama is the way he pretends he’s doing you a favor when he’s screwing you more. He did it with TARP, he did it with the Goldman Sachs staffed Treasury, he did it with health care “reform” and now he’s doing it to our kids - and to you - if you guaranteed any of these inflated loan scams. And I voted for him. The only thing that scares me more than him is his opposition in November.
I have a feeling a lot of the people occupying Zuccotti Park are or were recently in school. I don’t know, maybe it’s time to join them. Maybe, unlike school, I might learn something.
Marvin Wolf is a bankruptcy attorney and contributor to Local Talk.
Subscribe to this comment's feed
